Quarterly Upstream M&A and Capital Raising Deals Review – Q2 2020

GlobalData Energy 5 August 2020 (Last Updated August 5th, 2020 14:44)
Quarterly Upstream M&A and Capital Raising Deals Review – Q2 2020

GlobalData’s latest report, ‘Quarterly Upstream M&A and Capital Raising Deals Review – Q2 2020’, shows that global M&A and raising activity in the upstream sector totalled $127.5bn in Q2 2020. This was an enormous increase from the $47.4bn in M&A and capital raising deals announced in Q1 2020. On the volume front, the number of deals increased by 21% from 275 in Q1 2020 to 332 in Q2 2020.

Of the total value, $5.2bn was registered in mergers and acquisitions (M&A) in Q2 2020. This was a substantial increase of 148% from the $2.1bn in M&A deals announced in the previous quarter. Despite an increase in deal value, the number of M&A deals decreased by 24 percent from 112 in Q1 2020 to 85 in Q2 2020.

A total of 57 M&A deals, with a combined value of $3.7bn, were recorded in the conventional segment, and 28 deals, with a combined value of $1.5bn, were recorded in the unconventional segment in Q2 2020.

On the capital raising front, a total value of $122.2bn in capital raising was announced in the upstream sector in Q2 2020. This was an enormous increase from the $45.3bn in capital raising deals announced in the previous quarter.

Capital raising, through equity offerings, also registered a significant increase of 52% in the number of deals and 72% in deal value with 93 deals, of a combined value of $9.8bn, in Q2 2020, compared with 61 deals, of a combined value of $5.7bn, in the previous quarter. Capital raising, through debt offerings, witnessed a mammoth increase in deal values, recording $111.6bn in Q2 2020, compared with $39bn in Q1 2020. The number of debt offerings also increased by 121% from 56 in Q1 2020 to 124 deals in Q2 2020.

One of the top M&A deals in Q2 2020 was Total’s agreement to acquire 33.33% interest in Lake Albert development project including the East African Crude Oil Pipeline (EACOP) from subsidiaries of Tullow for approximately $575m in cash plus potential contingent payments after first oil.

The project includes nine production and two exploration licences in Uganda: (i) three production licences covering the former Block 1 area (covering the Ngiri, Jobi Rii and Gunya Fields), one exploration licence covering the Jobi East and Mpyo discoveries in the former Block 1 area, and one exploration licence is covering the Lyec field in Block 1A; (ii) five production licences in the former Block 2 area (covering the Mputa Nzizi Waraga, Kigogole Ngara, Nsoga, Ngege and Kasamene Wahrindi Fields); and (iii) one production licence covering the Kingfisher Discovery Area (which formed part of the former Block 3A). The oil fields are located along the Lake Albert Rift Basin in Uganda.

The top capital raising deal in Q2 2020 was ExxonMobil’s public offering of notes, with different maturity dates, for gross proceeds of US$9.5 billion. The company intends to use the net proceeds from the offering for general corporate purposes, including, but not limited to, refinancing a portion of its existing commercial paper borrowings, funding for working capital, acquisitions, capital expenditures and other business opportunities.